Savoury Oats and Silk Oats are Classifiable Under ‘Cereal Grains’ Attracts ‘nil’ Rate of Excise Duty: CESTAT [Read Order]

The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that Masala and Coriander Oats, Curry, Pepper Oats (Savoury Oats), and Silk Oats (Sweet Oats) are classifiable under the category of ‘Cereal Grains’ which do not attract any rate of excise duty. 

Ameya Foods, the appellant assessee was engaged in the manufacture and clearance of excisable goods ie, Masala and Coriander Oats and Curry and Pepper Oats (Savoury Oats), Silk Oats (Sweet Oats), and Muesli and also engaged in packing of oats and stated that the Savoury oats and silk oats are classifiable under cereal grains and attracted ‘nil’ rate of duty and Muesli was classifiable under processed food and attracted 6% rate of excise duty. 

The assessee appealed against the order passed by the adjudicating authority for confirming the demanding duty along with interest and imposed a penalty for the Savoury Oats, Silk Oats, and Muesli. 

Vipin Kumar Jain, the counsel for the assessee contended that the ‘Savoury Oats’ so processed by the assessee was essentially a pre-mix comprising of Oat Flakes, dehydrated vegetables, and seasoning products, and the plain oats which was the main input in this premix was imported by Marico Ltd and Customs classify as “Rolled or Flaked Grains of Oats” attracting Nil rate of duty. 

Further submitted that no element of either pre-heating or pre-cooking whatsoever is involved in the entire process and the process of manufacturing ‘silk oats’ (also called ‘fruit and nut oats’) was similar to that of manufacturing ‘savoury oats’, except that in the case of ‘silk oats’, the plain oats are sprayed with flavouring liquid and mixed with dry fruits and sugar. 

M. Ambe, the counsel for the department contended that after the scrutiny of the agreements and analyzing the process of manufacture the department was of the view that Savoury Oats and Silk Oats are classifiable under processed food which attracts a 12% rate of excise duty. 

The Bench observed that the cereal grains otherwise worked (for example, hulled, rolled, flaked, pearled, sliced, or kibbled) and it does not include cereal grains that have been roasted and do not include ‘prepared foods or cooked foods’ and on the perusal of the process undertaken by the assessee in the case of Savoury Oats and Silk Oats, there was no process of the item being cooked or prepared. 

The two-member bench comprising Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical) held that the savoury oats and silk oats were classifiable under the category of cereal grains which were not cooked or processed. 

To Read the full text of the Order CLICK HERE

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